Lockdown or not, the subscription economy is booming. According to Zuora, subscription growth is up 439% over the last 9-years as seemingly all aspects of our lives move to recurring payments.
Whether it’s our ingredients, coffee, cars or noise-cancelling headphones, subscriptions are ubiquitous and in the coming years, the subscription model will surface in increasingly diverse verticals as companies look to deepen relationships with customers whilst creating longer-term, recurring revenue streams.
The benefits to consumers are clear – increased convenience, lower upfront payments and more regular upgrades. The risks however are less obvious, with consumers often paying more than they would have via traditional means, or even worse, paying for things they don’t use.
Research from NatWest shows that the average Brit pays £496 each month in regular payments, £39 of which goes to products and services that are unused. Unsurprisingly, gym memberships topped the list alongside mobile contracts and video streaming services.
Ultimately, the subscription economy offers flexibility and improved short-term experiences, but consumers need access to tools to help them control and manage their regular outgoings. And their bank could be the answer. Given the vast improvement across digital experiences in nearly all aspects of our lives; by default, consumers expect their financial hubs to be delivering this kind of functionality.
Banks are quickly realising they need to evolve beyond direct debit controls to develop more holistic subscription management tools to help ensure consumers get the most from these types of recurring services. In addition to helping consumers save, banks are able to significantly reduce costs involved from administering incorrect charges, cancellations and chargebacks, creating a real win-win situation.
In parallel to delivering enhanced functionality to consumers and reducing operating costs, banks can increase revenues, whether by commissions received for introducing customers to new products and services, or from them investing the hard won savings. All this creates a virtuous cycle of engagement that builds loyal customer relationships.
Youtility offers a suite of embedded subscription management services that can greatly reduce a consumer’s regular outgoings by over £600 annually. Our platform delivers market leading user journeys that can help banks and fintechs give their customer the control to manage and save on these regular outgoings.
Barclaycard estimates the UK’s subscription habit grew by 40% in 2020, indicating a growing need for banks to assist with financial management services. If you are a bank or fintech and would like to learn more about this growing opportunity, please get in touch.